Govt mulls export sops for select sectors.

NEW DELHI: The government will consider extending export sops selectively after a detailed analysis following evidence that a strong recovery in the external sector was underway.

Most of the sops given to exporters to tide over the global slowdown, including the ones announced earlier this week, are valid only till March 31, 2010. This means that exporters can claim incentives only for exports made till the end of March.

"Only the incentives given to the garments sector for exporting to the US and the EU will continue till September 30, 2010," Commerce Secretary Rahul Khullar told ET.

The decision to extend sops, if taken, will be applicable with retrospective effect from the beginning of the new fiscal. The uncertainty would affect the pricing decisions taken by exporters as the incentives in the form of duty free scrips—entitlements that can be used to import goods duty free—worth 2% of the value of exports, is also factored into the prices offered by them.

However, the suspense would last only for a couple of months. The commerce department has started consultations with various export promotion councils to identify sectors that still require support and a decision on the matter is likely in May this year.

The directorate general of foreign trade (DGFT) is holding meetings with various export promotion councils to identify sectors which may need continued support. “Our stakeholder consultations have started and we may be in a position to take a decision by May,” Dr Khullar said.

In January this year, the commerce department had announced incentives for more than 2,000 products, including rubber, engineering and chemicals, linked to the markets that they were exporting to, at an estimated cost of Rs 400 crore till March 31, 2010.

It increased the list further earlier this week by including 500 other products like garments, electronic items, agro chemicals and engineering products at an estimated cost of Rs 625 crore.

The bulk of the allocation, about Rs 400 crore, will be cornered by the garments sector as it is the only item that has been given the incentive till September 2010.

India’s exports had contracted for 13 months beginning October 2008 as a result of shrinking demand due to global economic slowdown. It recovered in November 2009 and since then has posted a healthy growth, part of it due to an increase in global demand. India is expected to end the fiscal well below the $189 billion worth of exports carried out in 2008-09.

Source : The Economic Times